Oil prices slide 7% after producers' meeting is postponed

In this AFP file photo taken on March 3, 2016, an Iraqi labourer turns a valve at an oil refinery in the newly opened section at the oil refinery of Zubair, southwest of Basra in southern Iraq.

Global benchmark oil prices traded as much as $3 a barrel lower as the market opened for Monday's trading session, reflecting fears of oversupply after Saudi Arabia and Russia postponed to Thursday a meeting about a potential pact to cut production.

Brent crude traded lower by $2.39 a barrel, or 7 per cent, by 6:16 p.m. EDT (10:16 GMT) after earlier touching a session low of $30.03 a barrel.

US crude traded down $2.41 a barrel, or 8.5 percent, at $25.93 a barrel.

Late last week, prices had surged, with both US and Brent contracts posting their largest weekly percentage gains on record due to hopes that OPEC and its allies would strike a global deal to cut crude supply worldwide.

The COVID-19 pandemic caused by the novel coronavirus has cut demand and a month-long price war between Saudi Arabia and Russia has left the market awash in crude. During the month, prices have plummeted as the market has waited for a plan to cut production from OPEC and its allies.

Over the weekend, Saudi Arabia sent a signal that a production cut deal may be ahead, potentially muting the price decline. US President Donald Trump said he will put pressure on Saudi Arabia and its allies for such a deal.

"I don't know that anyone is going to get too aggressively short before the meeting," said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Saudi Arabia's decision to postpone its posting of the international prices for its crude for the first time indicates that it is not eager to flood the market with low-priced crude before a potential agreement, McNally said.

The kingdom delayed the release until Friday to wait for the outcome of the meeting between OPEC and its allies regarding possible output cuts, a Saudi source told Reuters. Trump said on Saturday that he will put tariffs on Saudi and Russian production, potentially accelerating an output cutback.

Russian President Vladimir Putin put the blame for the crash in prices on Saudi Arabia on Friday, prompting a response from Riyadh the following day disputing Putin's assertions.

OPEC and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.

Trump has, however, made no commitment to take the extraordinary step of persuading US companies to cut output. Per Magnus Nysveen, head of analysis at Rystad Energy, said the decline in global demand because of the coronavirus pandemic and the global lockdowns was larger than the proposed cuts by the OPEC alliance.

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